Recycling operations

Recycling operations have been increasingly profitable for East Valley municipalities but the gravy train has been derailed by the Republic of China's new policy of refusing to take American recyclables because they're too contaminated, making them ill-suited for re-use in other products. Though workers sort out recyclables, no municipality in the region achieves the new Chinese standard, forcing municipal recycling operations to scramble for new places that will accept the materials. Some experts fear China is at the vanguard of a new approach to recyclables and that other countries that currently accept them will follow that nation's lead.

Described as a “wakeup call” to the United States, the Republic of China’s decision to cease serving as a garbage dump for the world has crippled Phoenix East Valley municipal recycling businesses, costing municipalities hundreds of thousands of dollars.

The impact is dramatic: Last year, Chandler earned over a half-million dollars for selling its recyclables. This year, the Chinese action will cost the city nearly twice that instead to get rid of them.

Declared “National Sword” by Chinese President Xi Jinping, China’s drastic change to its recycling policy is aimed at stopping the flow of “foreign garbage” into the country.

Under the new edict, China will accept only recyclable bales with contaminant levels of 0.5 percent or better – a standard that American cities never come close to achieving.

The national average for U.S. recyclables contaminants is 25 percent – and the East Valley levels are no different.

Frank Flores, Gilbert’s environmental services manager, said the town’s contaminant level has run from 15 to 20 percent.

In Chandler and Mesa, it’s a little better at 11 and 13 percent, respectively. Phoenix stations average 25 percent, recycling representatives reported.

“I don’t fault them for doing what they’re doing,” Flores said of the Chinese, noting the U.S. needs to clean up its recyclables. “But I hate them for doing what they’re doing.”

He noted that China bought tainted U.S. recyclables for about 20 years before suddenly pulling the plug.

What this means is that too many improper or contaminated recyclables – plastic grocery bags, diapers, paper towels, tomato sauce-crusted cans, greasy pizza boxes and the like – were getting mixed into bales headed for China and winding up in the massively populated country’s landfills.

The reality now is that because U.S. cities can’t dispose of contaminated material in China, it’s getting dumped in la ndfills here.

That flies in the face of Phoenix’s goal of using recycling to divert 40 percent of its garbage from its landfills by 2020.

China was experiencing a building boom and needed recyclables to be converted into products for its infrastructure. But its construction sizzle cooled in the last few years, and China started caring deeply that U.S. and European recycling was filling up its landfills.

At the zenith of China’s recyclables-buying frenzy, it was receiving half of America’s recyclables exports – most of them from the western United States.

Municipal governments – including Gilbert, Mesa and Chandler –  sold their recyclables to material-recovery facilities such as United Fibers in Chandler, which in turn sold most of the material to China.

The process still works the same, except that what the recovery facilities pay municipalities has plunged dramatically this year because the China market has largely evaporated. In some cases, it’s gotten so bad that cities are suddenly paying the facilities to handle and dispose of their recyclables.

Take Chandler: It received $543,075 for its 19,500 tons of recyclables last year at $25.50 a ton. It expects to get some compensation from United Fibers this year for the sale of its goods but nonetheless projects a giant loss.

Because of China’s new policy, the Chandler City Council – at the behest of United Fibers – enacted a March 22 resolution canceling the city’s agreement with its recycling facility. The council instead agreed to pay the company $61 a ton to handle the recyclables.

“We won’t get the $543,000 this year,” and the projection is that instead “we will pay $450,000” to United Fibers for separating and selling or disposing the city’s recyclables, said Traci Conaway, Chandler’s recycling director.

That would be a negative financial impact of $943,000 this year over last.

“I don’t want to say we’re scared,” Conaway said of the blow from the China decision to Chandler’s recycling business.  “But it’s concerning.”

Industry in turmoil

Flores said Gilbert had anticipated receiving $375,000 from the sale of recyclables for the fiscal year ending June 30, but because of China’s new demand, it now projects it will get just 10 percent of that, or $37,500.

It’s a “huge loss,” he said.

It hasn’t been as severe for Mesa, according to Mariano Reyes, communications specialist for the Department of Environmental Management and Sustainability.

He said Mesa took in $819,301 for its recyclables last fiscal year and projects that it will receive $600,000 this fiscal year – about a 26 percent decline.

Reyes said the recycling industry has been in turmoil since the China decision: “We don’t know what the future is going to hold.”

In vastly larger Phoenix, China’s ban has cut the city’s net recycling revenue from roughly $500,000 a month in early 2017 to between $100,000 and $150,000 a month early this year, according to a presentation by Assistant Public Works Director Joe Giudice to a City Council subcommittee.

Giudice called this a “trend line” based on a “small sample size,” and in an interview, offered a different measure of the situation.

When the city compared the last quarter of 2015 with the last quarter of 2017, he said, it noted a 34 percent decline in Phoenix’s recycling revenue.

That was before President Xi’s new policy was kicked off early this year.

The recyclables commodities markets were impacted severely last year by Xi’s July announcement, but experts fear it will only get worse now that the ban is in effect.

Guidice said in his presentation that because the 0.5 measure apparently wasn’t met, ships loaded with recyclables have been turned away at Chinese ports.

The municipal recycling managers stressed that the recycling commodities market historically has been prone to fluctuation.

Trying to predict how such commodities will go is “like trying to predict the stock market,” Chandler’s Conaway said.

But the China decision has hit their cities hard, although the managers believe that other significant markets for American recyclables eventually will be discovered both here and abroad.

Already, markets for certain U.S. recyclables have emerged in India, Indonesia and Malaysia. 

And there’s hope among the Valley managers that more U.S. companies will crop up to help fill the void left by China – which paid so much for American recyclables for so long that it muscled out smaller competition.

As for China, some of the managers said they’ve heard rumblings in the industry that the nation is considering relaxing its 0.5 rule.

And some recycling business continues to be done with China.

Unlike the other cities surveyed, Phoenix operates its own municipal recycling facilities, which it pays waste-disposal giant Republic Services to manage.

Giudice said that company continues to have a contract with a Chinese business to provide a “newsmix” of newsprint and other paper.

But he stressed that the U.S. never should have relied so heavily on China as the dominant market for its recyclables. He labeled Xi’s decision a “wakeup call” to diversify.

Whatever markets are found or restored for U.S. recyclables, the consensus among Valley managers is that their products must be far less contaminated from the get-go.

Tainted recyclables hit landfills

“A lot of what we were sending to China is now going to landfills here,” said United Fibers CEO Ron Whaley, who believes that cities eventually can get their recyclables inventories to 0.5 percent so that they can be sold again to the Chinese.

Whaley said United Fibers is installing equipment over the next few years that will make it possible to better separate out contaminates from city recyclables loads so that shipments can meet China’s specifications.

This will hugely reduce the recyclables going to landfills, he said, and make more money for recycling facilities and cities.

That would give cities more money for public education aimed at achieving the 0.5 mark.

“China can’t be replaced,” Whaley said. “I hear talk from people (in the recycling business) that China will relax the 0.5, but I don’t believe that.”

Municipal recycling officials stressed the need to step up efforts to educate citizenry on what’s proper to put in those blue recycling cans – and what’s not.

Conaway reported that Chandler trash and recycling collectors have found strange material in recycling cans, including an automobile manifold.

A goat carcass is the most bizarre thing workers at United Fibers have found among recyclables, Whaley said.

But Conaway said that before the China decision wreaked havoc on her world, the biggest problem recycling departments faced was residents’ putting plastic grocery-store bags into blue bins.

‘Wishful recycling’ must stop

Mesa’s Reyes called this behavior “wishful recycling.”

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